Pandemic Silver Lining Series: Key to Sustainable American Leadership
American infrastructure is overdue for investment in deferred ‘fixes’ to existing hardscape (roads, bridges, airports and ports). We’re presented, as we build back after the shutdowns of 2020, an opportunity to additionally step back and consider those repairs in a context of supporting our economy to sustainably grow and thrive in the dramatically reconfigured – and continuing fluid — global economy. It’s the ‘human infrastructure’ component of proposed investment that puts the ‘better’ in building back better!
David Lynch, global economics correspondent for the Washington Post, observed on Global Public Square, last week that the USA is basically set up for an economy that no longer exists.
US Manufacturing employment peaked in the 70’s. However, although the US economy has been categorized as a services economy for decades, there’s been very little responsive adjustment to our educational system or our infrastructure to accommodate the shift from manufacturing to services. The current crawl through US Congress of two infrastructure bills illustrates a willingness to (maybe) fix ‘what is,’ but huge ‘controversy’ about the need for underlying systemic change to infrastructure. If the $17 billion earmarked in the bipartisan infrastructure plan is approved, that will produce improvements in our ports, but will fall short of a comprehensive solution.
Gene Seroka, executive director of the Port of Los Angeles spoke to the Washington Post, “What I’ve seen from places like Hamburg and Shanghai, Singapore and Jebel Ali outside of Dubai, is they’ve had port community systems for decades, sharing information between customs and transportation, private and public sector, to make for their supply-chain fluidity as the primary focus.”
Lynch contrasts this ‘community systems’ approach to the US model: ‘They all have access to the same data, so they can work together as a choreographed operation, whereas in the U.S…. carriers have their set of data. The terminals husband their information. Shippers themselves don’t want other people to know or their competitors to know what they’re ordering…the pandemic as sort of a stress test for the supply chain, has shown us … changes that companies need to make in the way they organize.’
The massive growth in goods buying by Americans sheltering in place immediately changed the very nature of our economy. We started ordering home goods, activities and learning supplies to replace in person schooling and going out to eat, take in a movie or a concert. The influx of so much more physical product stressed the system. Says Lynch “All of a sudden, it’s trying to bring in X plus 20 or X plus 30 percent, and [the US system] is not built for that…We are bringing … into the country, more cargo than we ever have before. The Port of L.A., I think, this year expects to process something like 10.8 million standard units of these containers. That’s a remarkable amount of work. It’s not a system where you can easily add capacity. If you think of what’s involved in a port, these are giant, sprawling operations. You can’t just go build another one. And even though some new investment is happening, the shipping lines in particular have ordered more vessels that will be delivered probably in 2023, 2024, because, again, imagine what’s involved in building one of these container ships.”
Underlying these challenges is the fact that for decades, supply chain practitioners have centrally focused on efficiency, stripping out ‘excess’ inventory and waste from the system to make, move, store and deliver ‘just-in-time’ at the lowest possible cost. With short term stock performance and cost efficiency as our watchwords … maybe supply chains have become too lean? And now there’s more ordering ‘just-in-case’ inventory to avoid shortages and bullwhip effect rippling tsunamis all the way down the ‘chain.’
A crucial part of the new reality is that working people are re-evaluating work itself for a multitude of reasons. People in jobs that pay too little to afford childcare, require long commutes to affordable housing, present possible exposure to deadly disease, are balancing risk and rewards. With job satisfaction a huge part of business success, these concerns and challenges must surely be addressed in the development of 21st century infrastructure.
Merriam-Webster says infrastructure is the set of resources that make an activity possible.
Childcare and healthcare support and access to the internet have facilitated survival for a number of companies through ‘shelter-in-place.’ A ‘growing number of companies have announced that they plan to “embrace flexibility,” particularly in a hybrid working model,” going forward post-pandemic.
So let’s not dismiss out of hand, as ‘too costly’ the proposed elements of human infrastructure investment. Transformative change is not quick or easy. As we rebuild, let’s take a beat to reflect on what doesn’t serve us well and craft fresh strategy for a fluidly reshaping economy. Anxious calls to get ‘back’ to normal center on what was. And the vision for human infrastructure comprehensively embraces the new.